Note 2.

Organization of the Company and Going Concern

Organization of the Company

Green Energy Management Services, Inc.

Green Energy Management Services, Inc. ("GEM") was incorporated pursuant to the laws of the State of Delaware in March 2010. GEM is primarily involved in the distribution of energy efficient lighting units and water saving devices to end users who utilize substantial quantities of electricity and water. GEM primarily maintains its business operations in Baton Rouge, LA, distributing products and services to municipal and commercial customers. The participants of the industry in which GEM operates focus on assisting clients to effectively maximize their energy efficiency potential and couples that with maximizing their renewable energy potential.

Green Energy Management Services Holdings, Inc.

Green Energy Management Services Holdings, Inc. ("GEMS Holdings") was incorporated pursuant to the laws of the State of Delaware in December 1996 and prior to its merger with GEM became a dormant fully reporting shell company in December 2006. On August 20, 2010, GEMS Holdings' wholly owned acquisition subsidiary merged with and into GEM with GEM being the surviving corporation. As a result, GEM became the Company's wholly-owned subsidiary and GEM's business is now the Company's only business.

Going Concern

The unaudited condensed consolidated financial statements included herein have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying unaudited condensed consolidated financial statements, we have generated minimal revenues in the first nine months of 2012 and we have a working capital deficit of $4,630,709 as of September 30, 2012. These factors raise substantial doubt about our ability to continue as a going concern.

Our ability to continue existence and our business operations is dependent upon our continuing efforts to implement our new business strategy, management's ability to achieve meaningful profitable operations and/or upon our ability to obtain additional financing to carry out our business plan. We intend to fund our operations through equity and/or debt financing arrangements, any revenues generated in the future and any loan arrangements that may be provided to us by our affiliates. However, there can be no assurance that these arrangements, if any, will be sufficient to fund our ongoing capital expenditures, working capital, and other cash requirements. The outcome of these matters cannot be predicted at this time.

The accompanying unaudited condensed consolidated financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification of liabilities that may result should we be unable to continue as a going concern.